The immediate impetus for Minister Sidhu’s activities stems from a broader trend: the Indo-Pacific represents Canada’s second-largest regional export market, currently valued at $261.4 billion in 2025. Data from Global Affairs Canada highlights a remarkable upward trajectory in bilateral trade, with merchandise trade rising 9.3% to $42.3 billion in 2024 – a significant increase from $38.8 billion in 2023. This growth is particularly pronounced in relationships with key partners such as Singapore, where bilateral trade totaled $3.7 billion in 2024, up from $3.2 billion in 2023, and Malaysia, with trade volume increasing by 36% to $5.2 billion in 2024, compared to $3.8 billion in 2020. The success of the Canada-Korea Free Trade Agreement, implemented since 2015, has similarly driven trade volumes, with 99% of Canada’s exports to Korea now duty-free.
Key Stakeholders and Motivations The Ministry of International Trade is navigating a complex geopolitical terrain. Canada’s engagement is driven by several factors. Firstly, securing access to growing markets, particularly in Southeast Asia and Korea, is a primary objective. Secondly, the establishment of trade agreements fosters economic diversification, reducing reliance on the United States as its largest trading partner. Thirdly, participation in APEC, with its 21 member economies accounting for nearly 40% of the world’s population, provides a platform for influencing global trade rules and promoting Canadian interests. This includes reinforcing Canada’s commitment to the “rules-based multilateral system” as articulated at the 36th APEC Ministerial Meeting.
Digital cooperation, particularly concerning artificial intelligence (AI), has emerged as a central theme. Following the Canada-hosted G7 Leaders’ Summit in June 2025, which issued a joint statement on the potential of AI for prosperity, Canada is actively exploring opportunities for collaboration in this rapidly developing sector. This reflects a broader trend among developed nations seeking to harness AI’s benefits while mitigating potential risks.
Regional Alignment and Geopolitical Context Canada’s activities are not occurring in a vacuum. The broader geopolitical context is dominated by increasing competition between the United States and China. While Canada maintains a strong alliance with the US, it is also attempting to foster independent relationships within the Indo-Pacific. Minister Sidhu’s meetings with officials from Vietnam, Thailand, and the Republic of Korea are indicative of this diplomatic balancing act. The strategy appears aimed at supporting a stable, rules-based order in the region, even as China’s influence grows. The ongoing negotiations on free trade agreements with ASEAN nations – with the stated goal of concluding by 2026 – underscore this commitment.
Short-Term and Long-Term Outlook Over the next six months, we can anticipate further refinements to existing trade agreements, potentially with increased emphasis on securing investment commitments in sectors aligned with Canada’s green technology and digital economy priorities. The pace of negotiations on the ASEAN free trade agreement is likely to be a key indicator of Canada’s commitment. Longer-term, Canada’s strategic alignment with the Indo-Pacific will depend on the evolving dynamics between major powers. Maintaining strong relationships with countries like Japan and Australia, alongside continued engagement with India, will be crucial. The success of Canada’s strategy will ultimately hinge on its ability to forge independent partnerships that contribute to a stable and prosperous region.
Looking ahead, a significant challenge will be maintaining consistent engagement while navigating competing demands from the US and China. Canada will need to demonstrate its commitment to multilateralism while simultaneously protecting its economic interests. The commitment to AI cooperation represents a potential opportunity, but also a potential area of friction if alignment with other partners is not carefully managed.
The increasing focus on digital cooperation and the broader integration of AI into economic strategies could redefine Canada’s role within the Indo-Pacific. Further analysis of the ongoing negotiations and Canada’s performance in key sectors will be critical to assess the long-term impact of this strategic endeavor. Sharing perspectives and engaging in robust debate about this evolving dynamic is essential.